2016 Election Results – What is the Future of Healthcare Reform Now?

With the 2016 election results in the history books, the question on everybody’s mind is: What does this mean for the future of healthcare reform and the Affordable Care Act (ACA)?

Jonathan Edelheit, president of the Health Care Reform Center and Policy Institute; and Ben Connelly advisor and board member of the Health Care Reform Center and Policy Institute as well as an instructor for the Certified Healthcare Reform Specialist® program and an expert on healthcare reform, held a webinar to discuss the results and potential outcomes for the ACA hours after the election was called for Mr. Donald Trump. The following is a summary of that discussion:

“The Health Care Reform Center and Policy Institute, stays independent, unbiased, and bipartisan,” said Jonathan Edelheit. “We don’t really take any views on the law, who’s passing the law, political parties or anything like that. We just focus on providing the education toward ‘what does it really mean.’ What are good parts of the law? The bad parts? The ugly parts? How do you comply and what do you need to stay on top of? That’s what we focus on. I think the important thing is we don’t get caught up in any political or election talk, we just stay with the facts because we need to conduct our businesses based on what’s going to change.”

The Health Care Reform Center & Policy Institute was taking a position on the ACA before the law was even passed in 2010, before CNN, Fox News, or any of the news agencies were addressing the law. We were telling people what it really means and who it’s going to effect. We were first in the industry to tell agents they were going to lose their commission. The key thing with the healthcare reform law is, even if nothing has changed yet, you need to stay on top of any proposed laws and regulations so that you can guide your clients through the entire process. You’re going to have clients asking you today, tomorrow, or a month from now: What does this mean? So unless you follow these developments on a day to day basis, you’re not going to be able to inform your clients 100 percent accurately. To help you and your clients, the Certified Healthcare Reform Specialist® will be here to help you with what you need to know about the changing healthcare reform landscape.

We won’t know for the next few months whether the ACA is going to be completely repealed, or if it will just be modified with some parts staying the same.

Here is what we do know of the core points of what Trump wanted to do with healthcare reform:

To allow individuals to totally deduct their health insurance payments.

To expand and allow individuals to use health savings accounts, and eliminate any penalties to allow more flexibility.

Requiring price transparency for healthcare providers, hospitals, clinics and doctors to so people can shop for their healthcare.

Give block grants to the states for Medicaid

Remove barriers to entering the free market for drug providers as well as insurance markets like barriers across state lines with health insurance, which may be very disruptive and chaotic – which is how everything’s been regulated for a long time.

If it’s deregulated, who’s now regulating it? How does it happen? What happens with the agent’s role in a deregulated market with no state lines? What happens to the carriers?

The Republicans may now be in a position to move forward on healthcare reform with their proposals. The question we’ve getting the most from folks, is what does this mean? Can Republicans actually repeal the ACA now?

The short answer is no. Republicans still do not have a ‘filibuster-proof majority’ in Congress that would allow them to ‘repeal and replace’ as has been the mantra – both from Donald Trump, as well as the Republican Party along the way.

Even if you get a few folks to cross the aisle from the Democratic Party, it looks like the Republicans are only going to have between 51 and 52 senate seats. So, repeal and replace, in left itself isn’t feasible, at least not at this stage, even with both Houses of Congress and the Presidency under control.

There are still two potential steps that a Republican Congress and Donald Trump can take without Democratic support in order to undercut the effectiveness of the ACA.

With a majority in Congress, the Republicans have the ability to control spending on the ACA via the House of Representatives’ ‘Power of the Purse’. The ACA can’t operate without federal tax dollars flowing into the marketplaces, IRS and DOL investigatory efforts and other enforcement efforts.

In 2010 when this law passed, the Democrats had a supermajority in Congress. When both the House and the Senate passed their own versions of the healthcare reform bill, they were slightly different. Both houses were hashing out the differences when Senator Ted Kennedy passed away and his seat went up for a special election. It immediately became apparent that: (1) the Democrats’ majority fell below 60 votes, and (2) Senator Kennedy’s seat was going to go to a Republican. Realizing they no longer had the ability to pass something unilaterally, the Democrats did something unprecedented and used the reconciliation process, allowing them to modify the law or pass the tax provisions under the law. So it appears that Republicans have the ability to repeal portions of the ACA – and specifically, portions of the law that relate to tax provisions –based on this roadmap laid by a Democratically controlled Congress.

These provisions include the employer mandate, the individual mandate and the tax credits available on the marketplace.

Reconciliation does not extend to the other design-based provisions in the law including the ban on pre-existing condition exclusions, and the adult child coverage mandate.

Estimates are that a flat-out repeal will result in the loss of health insurance coverage for 20 million Americans. Even Republican members of Congress have said, ‘It’s not our intent to drop health insurance for 20 million people. We’re going to come up with some sort of fix.”

What you will likely see is some sort of hybrid approach.

Back in early 2016, Congress passed a repeal of the ACA that Obama vetoed. If you look at the underlining of that proposal, you will find included a ‘poison pill.’

Congress passed a law that was repealed but could brought back with the inclusion a two-year period during which the tax credits would be grandfathered in. After that point, they would be repealed in their entirety.

This approach allows the Republican Congress and Trump to force the Democrats to the table to negotiate a broader repeal and replace initiative based on the presumption that if two-years run past and nothing happens, the tax credits go away and 20 million people lose health insurance coverage.

This is a politically dicey move because in two years – as we saw play out back in 2010 – when both sides start blaming the other side.

The Democrats arguing that the Republicans started the ball rolling

The Republicans arguing that the Democrats had the opportunity to replace this with something else but chose not to do so because they were being obstructionist.

All the pieces are in place now that if a Republican-held Congress wanted to repeal the law, they could. The more practical political reality, however, is that it’s a more complicated discussion, and too early to predict.

The second topic to cover is a prognostication of what we might see in lieu of the ACA.

What you see in this respect is a cobbled together hybrid of various provisions of the ACA, as well as some of the new proposals discussed earlier.

The Republican Congress’s plan – specifically Paul Ryan’s proposal – would include retaining some of the most popular provisions of the ACA like:

The ban on pre-existing condition exclusions,

The ban on insurance companies rescinding adult child coverage

Some of the wellness incentive provisions under the law while jettisoning other wellness incentives under the law.

Even if it is technically a repeal and replace, many of these replacement elements will be very similar to what was in the law originally.

We are very unlikely to revert to a pre-ACA environment.

The challenge Republicans in Congress will face, as you saw the morning of the election when many health insurance carriers’ stocks dropped precipitously, is that a ban on preexisting conditions exclusions in and of itself can lead to the so-called ‘death spiral.’

This is because no limit on pre-existing conditions incentivizes people to wait until they are sick to buy health insurance coverage. The ACA attempts to moderate this in some way with the individual mandate, but a lot of people criticize it as not being effective at driving people in the marketplace, healthy lives in the marketplace.

The Republican proposal seems to be harkening to the HIPPA guidelines from the1990s that applied to employer-sponsored plans but not to the individual marketplace.

You would have the ability to always get another insurance policy, but only if you’re coming off of an existing insurance policy. Therefore, as long as you don’t allow a gap in coverage, you always have the ability to rollover from one insurance policy to the next without imposition of preexisting conditions exclusions.

If you do have a gap in coverage, the Republican proposal appears to be suggesting a resurgence of what we would call ‘state high-risk pools,’ where individuals who are otherwise uninsurable would have an avenue to get health insurance.

There are those who say high-risk pools have mixed success. They often ran out of funds because you have a health plan covering only sick individuals, so it becomes prohibitively expensive without those healthy premiums offsetting that cost.

So whether that ends up being in the final proposal, that was all part of the Paul Ryan proposal. The Trump proposal, to date, hasn’t really hit on those elements. So it remains to be seen what the final package is going to look like. All we’re really doing at this point is speculating. We have not seen anything comprehensive that we could suggest this is where things are going to end up.

Q & A

Q: With the different variations of what could happen to the ACA – ‘repeal and replace,” modify, etc. – how long do you think this could take? Are we talking a month, two months, a year, two years, three years, what are the possibilities?

A: Overall, repeal and replace would be a much longer process for the following reasons:

They have to negotiate with the other side to come up with some kind of comprehensive package that all parties agree on, and that’s just not going to materialize overnight.

When passing a new law that’s been subjected to Congressional Budget Office scoring, the regulatory process involves proposed commentary or proposed regulations followed by a notice and comment period followed by final regulations. That process, in and of itself, could take at least a year.

Here is a look the process to repeal some of the specific elements.

The new members of Congress currently hold the majority, but Trump won’t be sworn into the Presidency until January.

The timing of that process, is not as important as the structure of that process, because if you look at some of the proposals from congress that were previously vetoed by President Obama, they involved a reduction of penalties under the employer mandate, retroactive to the effective date of the employer mandate. So that proposal would have been in 2016 that would have retroactively removed the penalties all the back to the beginning of 2015, meaning even if you’re in violation of that law, the IRS has no statutory authority to assess a penalty against you.

So, could this all go away immediately?

I don’t think you’re going to see that happen on January 8th. But could it effectively go away with a retroactive date? At least some pieces of it potentially, yes.

Q: What is the longest period this could potentially take?

A: An important point here is that never in the history of Congress has Congress repealed an entitlement program – i.e. Social Security, Medicare, and Medicaid – which is what you’re effectively proposing here when talking about getting rid of the exchanges and the marketplace tax credits.

So, the problem the Republican party is going to face at this stage is getting buy-in from their own stakeholders. Certainly, if you want to throw out the red meat and say we’re going to repeal the ACA, that in of itself is always going to get a huge applause line from Trump supporters. But, when you get down to the core constituency, and you’re talking about 20 million people potentially affected, if this election ultimately is decided based on [1.7 million as of November 22, 2016] votes, then a 20 million vote swing – even if you assume that half of those people are Republicans losing coverage and only half of them change their vote as a result – is still enough to tip the scales.

Therefore, there is a possibility that Congress never gets behind an effort to fully repeal, at least not in the form that has been proposed.

Q: What is a supermajority and how difficult is it to achieve?

A: First, a filibuster is the ability of one senator to stand up and talk indefinitely to kill the bill by obstructing the vote from proceeding. A 60-vote majority is needed to override a filibuster, which is a known as a supermajority.

However, it looks like the Republicans will only have a 51 or 52 vote majority, short of the 60 necessary. There’s certainly a possibility – and in an earlier political era, a likelihood – that some Democratic senators would come across the aisle and work with Republicans to pass something comprehensively, and put them over that 60 vote threshold. But, this is a different political environment, I think we all saw that election night.

Q: What do you say to agents or brokers who, because Trump’s election, feel they don’t really have to worry about the ACA anymore?

A: The key message that we got from this election is that nothing is certain. While there’s certainly been a lot of politicking on the idea of repealing the law entirely, there are a lot of steps that need to take place between now and then. If it becomes apparent that the law is not repealed, or is not repealed in the form that we think it will, then you don’t get a do-over. You don’t get to stop offering coverage in November of 2016, and in February of 2017 say ‘whoops, guess I should’ve been doing that all along, so just give me a pass on penalties for that stretch.’ The message continues to be keep moving forward as if nothing has changed until something actually, affirmatively, changes.

Q: Is there the potential for nothing to change for a year, or two years?

A: Yes, absolutely. For a long period of time, if at all. Again, the most prudent course of action at this point is to assume status quo until we see otherwise.

Q: So, if things don’t change for a year or two, and then two years from now the law changes, is there a high likelihood that those fines will still be enforced, correct?

A: That’s exactly right. I was reading an article this morning about that reconciliation process, where the senate could effectively repeal portions of the law with their 51 or 52 votes. Is said that many of the Senators who voted to for the repeal based on the reconciliation process, voted on the premise that it was to be vetoed anyway. So I don’t think you can necessarily ensure a party line vote, where you can ensure that all 51 or 52 Republican members of the Senate are going to just roll back this law without regard for the potential consequences. Especially when considering that a number of those individuals are going to be up for reelection in a moderate district in two years. There is almost a historical precedence that in off years, the party in power loses in congressional mid-term elections.

Again, just because there is this majority across the board doesn’t mean that there aren’t going to be factions within the party who have a different perspective. You saw that in 2010 when the ACA passed. President Obama and Congress couldn’t immediately pass the ACA because moderate members of the Democratic party were not on board with passing the law in the form it was originally proposed.

Q: What should a broker or agent tell their client who asks what they need to provide for the upcoming changes?

A: This is not going to be the message that you’re going to want to hear, but I think engaging and participating in programs like the CHRS would be the most help. I think we all have a fair level of comfort with the ACA, what it means and what works. We have some comfort with the measurement and stability periods and how to determine a full-time employee.

An election of Hillary Clinton would’ve meant more of the same; meaning no need to learn a lot of new provisions. I think the election of Donald Trump with a Republican majority in Congress almost guarantees there’s going to be some form of change, we just don’t know what that is at this point.

The message is to get ready for more confusion and uncertainty surrounding how to structure health benefit programs.

Q: As this moves forward, there will be different pieces of legislation from the Republican Party. Do you think that the brokers, agents, and employers need to know what those proposed rules and regulations are? Is an understanding of these as they move the process valuable? What can we learn from that process?

A: One thing that you always see is that there is a premium for advanced knowledge and advanced certainty. In other words, when the ACA passed, everybody wanted to sit down with somebody who knew about it and discuss what it meant. Then two years later, everybody caught up. Without a doubt, I think the same is going to be true here.

Everybody wants to know what this election means today because you want to tell your clients and be the first person breaking that news to them. That’s going to continue to be the case for the next six months to a year as we see things unfold.